Bad news doesn’t get better with age, and neither does a bad legal argument.
Unfortunately, the Biden Justice Department recently proposed resurrecting a bad—and illegal—Obama-era practice that let left-wing operatives control a slush fund to reward their political allies with the public’s money. And they want to do it without even making any effort to persuade Congress to authorize the giveaway.
If a politician handed out $100 bills, it would be seen as vote buying. If Congress passes a law giving out $100 billion in the hope of getting votes … well, that’s Building Back Better, but at least it would have the fig leaf of statutory authority. What the Justice Department is proposing has no statutory shield. It’s simply taking money that, by law, should be paid into the federal treasury and giving it to their friends instead. There’s a word for that: theft.
Here’s how it would work. The Justice Department sues a company, seeking billions of dollars in damages. The company realizes that defending the suit will be expensive, time-consuming and burdensome. Plus, there’s no guarantee of success.
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That’s when the Justice Department makes the company an offer they can’t refuse. If the company agrees to pay money to one or more third-party advocacy groups on an approved list, DOJ will settle the case, often for a fraction of the original amount demanded, and often with two-for-one credit for each dollar donated to the favored group.
From the perspective of the company’s executives, it’s a no-brainer. They can settle the case at a massive discount. But why would the Biden administration want to settle for pennies on the dollar?
If you’re looking for a legal justification, you’re looking in the wrong place. This is all about politics: a way to increase its political power, reward its political allies and, in some instances, circumvent the express will of Congress.
Think we’re exaggerating?
In the Housing Settlement Cases stemming from the 2008 financial crises, the Obama Justice Department handed out money to fund “housing counseling” programs at the Department of Housing and Urban Development. Congress had stripped money from those programs because HUD had “spread around money to groups like La Raza,” a radical left-wing organization.
Then there’s the Volkswagen emissions settlement. As one commentator noted, “In 2016, DOJ required Volkswagen to pay $2 billion to fund an electric car initiative that Congress had specifically rejected.”
These slush fund settlements are illegal and unconstitutional. The Trump administration prohibited the practice. These diversions of funds are precisely what the framers sought to bar when they denied executive officials the independent authority to decide how to disburse federal money.
Only Congress has the constitutional authority to appropriate money. And it has enacted a variety of federal statues to make sure that the executive branch does not encroach upon that authority.
Sadly, Attorney General Merrick Garland seeks to do just that—in contravention of those statutes and the Constitution. His recently issued memo and proposed rule change would allow the Justice Department to once again engage in these deplorable practices.
Thirty-five members of Congress, led by Sen. Tommy Tuberville and Rep. Lance Gooden sent Mr. Garland a letter earlier this month, urging him not to make these changes.
They expressed their adamant opposition to the “administration’s decision to reinstate the unethical and controversial practice of forcing defendants to pay settlement monies directly to unrelated third parties, circumventing the Treasury and Congress.”
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The letter went on to note: “Serious conflicts of interest arise and public trust is eroded when the DOJ requires defendants to donate to activist groups selected by the DOJ.”
The letter is a good start. But lawmakers should, at the very least, conduct oversight hearings to find out how extensive this practice is and who is getting money that should have been deposited in the federal treasury. Congress should also make clear that, given the practice’s illegality and unconstitutionality, anyone who authorizes such a settlement or participates in its execution could be subjected to impeachment and removal from office.
As a practical matter, though, lawmakers may wish to reserve this remedy for high-ranking officials like the attorney general, the deputy attorney general, the associate general or the relevant assistant attorneys general—all appointed officials—who approve these settlements.
Is this really a time when the Justice Department can afford to erode public trust? Hardly.
But that’s what the Biden administration has chosen to do.